5 Steps to guard against embezzlement

Navigating the world of financial trust is daunting for many business owners. As you focus on your passion, the finances often become a side task, tempting delegation to anyone claiming expertise. However, ensuring the credibility of those you entrust with your money is paramount.

1. Don't trust just anybody

From the outside, this sounds like the worlds most obvious advice. obviously, you shouldn't trust just anybody with your money. But as a business owner, you don't get into business because you want to deal with finances, and once you get busy with clients it'll likely be one of the first jobs that you want to delegate. Amid a busy stressful season of work, you will be tempted to hand it off to anybody that walks through the door and calls themselves a bookkeeper or an accountant. DON'T do it. you wouldn't hand your wallet to a random stranger in the mall and let them handle your personal finances, and you shouldn't trust some rando off the street that offers to help with your books either.

Always, always, always, thoroughly vet whomever will be handling your business finances.

2. Get references and testimonials

The first step to thoroughly vetting an individual always includes asking for their references. speak with multiple people in their lives and other business owners who have worked with them in the past. Look for testimonials. they might have some posted on their website, and there may be a google page out there with reviews and testimonials as well.

3. Verify if any credentials

Unlike a CPA, doctor or lawyer, in the USA there are no national standard requirements that need to be met before becoming a bookkeeper. As long as one understands the accounting principles and knows how to work Quickbooks or other accounting software, they can call themselves a bookkeeper and start taking clients. There are, however, many great certifications given through completion of popular software and bookkeeping courses such as Quickbooks ProAdvisor certification, Institute of Professional Bookkeepers USA, and Bookkeeper Launch, just to name a few.

Although I feel that the Quickbooks ProAdvisor certification should be a minimum requirement, since it is free, if you come across somebody without at least that, check to verify if they have taken any local college courses or online courses to learn accounting. Bookkeeping is a profession where ongoing education is absolutely an expectation due to continuously changing laws, so lacking a willingness to pursue more education or certifications is absolutely a red flag.

4. Do a thorough background check

As an adult, our legal records are publicly available on the internet. just like a potential employee, you should absolutely pull your potential bookkeepers' public records to verify if there is anything concerning. Make sure to ask for their legal name, maiden name if married, any other names that they may have gone by legally, as well as their date of birth. this will allow you to pull up any records they may have. if you are unable to find the information yourself, you could likely call the non emergency police number and see if they could pull any information.

A few years ago, in my town, a bookkeeper was caught and sentenced to 10 years in prison for embezzlement of hundreds of thousands of dollars. This never wouldve been able to happen if the business owners had done a background check, as they wouldve found she had previously served a similar sentence in prison for the same crime! Now, I don't know the details of what she told them about herself, apparently she is quite the sociopath.. however, you can never be too safe. I read a news article stating that the judge wanted to make it so that she could never practice bookkeeping again, but that probably won't stop her from trying. Again, dont let just anybody handle your business finances!

5. Checks and balances

The last thing that you can do, and MOST important, is to employ a system of checks and balances. For a bookkeeper to do their job, they need receipts, bank transactions, bank/credit card statements and access to your accounting software. DO NOT allow them to have a debit card to pay bills. DO NOT allow them to sign checks. DO NOT give them more than "view only" access to your bank account.

As a bookkeeper, I will absolutely create checks for my clients in Quickbooks, but they are responsible for printing the check and signing it to pay their contractors and vendors. I am happy to do an internal transfer in the checking account to payoff the credit card balance, but I will not pay the vendors for you. These are not tasks I would personally feel comfortable doing, and if somebody offers to do them for you, you should also say no.

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